The Commonwealth Bank first-half cash profits swelled by almost a quarter to $4.7 billion and it will return a further $2 billion to investors through a share buyback, as the banking giant’s bottom line benefited from market share gains and lower provisions for bad debts.
CBA on Wednesday reported it had expanded faster than the market in mortgages, deposits and business lending, as it also cut provisions for bad loans to an improving economic outlook. The growth in its profit came despite a sharp decline in the bank’s profit margin, as it felt the impact of fierce mortgage competition and a boom in less lucrative fixed-rate lending.
Shares closed at $94.30 on Tuesday.
CBA delivered a $4.7 billion first half profit. Credit:Will Willitts
The bank raised its dividend by 17 per cent to $1.75 a share, and said it planned to return surplus capital by topping up last year’s massive off-market $6 billion buyback with a further $2 billion on-market buyback.
The result is higher than the market’s expectations of first half profits of $4.37 billion and an interim dividend of $1.72.
Chief executive Matt Comyn was upbeat on the economy, drawing attention to the plunge in unemployment to its lowest level since 2008, and re-iterating the bank’s view that official interest rates were likely to start rising this year.
Computershare has upgraded full-year guidance after unveiling a stronger than expected interim result.
The $12 billion corporate registry services provider says revenue rose 5.9 per cent to $1.16 billion and net profit increased 27 per cent to $92 million in results released after the market closed on Tuesday.
It also declared an interim dividend of 24¢ per share with a February 16 record date. Shares reached an all-time high of $20.94 in mid-January, and closed at $19.93 on Tuesday.
Computershare’s profit margin increases with interest rates, because it earns interest on the cash it holds for corporate dividends or M&A activity. Credit:Getty
“I am pleased to report that the momentum we enjoyed in the second half of last year has continued, with Computershare delivering a positive set of results for the first six months of 2021-22,” Computershare CEO Stuart Irving, says.
“With first half results ahead of expectations, and a positive outlook for the second half of the year, we are upgrading full-year earnings guidance. We now expect Management earnings per share (EPS) to increase by around 9 per cent this year compared to the original 2 per cent guidance we gave in August,” says Irvine.
The company said its recently acquired Computershare Corporate Trust (CCT) business in the US performed above expectations and it expects to benefit from a 25 basis points interest rate rise in the United States in the fourth quarter.
“As expectations have also firmed for more interest rate rises this year and beyond, Computershare is well placed to benefit. A 100 basis points increase in interest rates on the exposed average balances we currently manage would generate an annualised EPS increase of 26¢ per share,” it says.
The investor services company’s earnings are sensitive to interest rate movements because it derives margin income on cash held on behalf of its share registry clients before dividends and other distributions are paid.
Computershare provides stock registration and transfer services to listed companies.
According to Bloomberg Intelligence, US dollar denominated balances made up half the funds it holds on behalf of clients.
Computershare plunged to a low of $9 in March 2020 as the prospect of pandemic-induced lower interest rates across the globe slashed earnings expectations.
- ASX futures up 0.3% at 8.44am
- Australian dollar +0.1% to 71.36 US cents at 6.55am AEDT
- Wall Street: S&P 500 +0.8%, Dow Jones +1.1%, Nasdaq +1.3%
- Europe: Stoxx 50 +0.2%, FTSE -0.1%, DAX +0.2%, CAC +0.3%
- Bitcoin -1.9% to $US43,056.86 on Bitstamp at 6.56am AEDT
- Spot gold +0.4% to $US1827.18 per ounce at 6.55am AEDT
- Brent crude -2.2% to $US90.61 a barrel at 6.39am AEDT
- US oil -2.4% to $US89.17 a barrel at 6.39am AEDT
- Iron ore +1.1% to $US128.94 a tonne
- 10-year yield: US 1.95% Australia 2.12% Germany 0.26%
Good Morning, hello and welcome to another session of Markets Live.
The half-year reporting season is starting to get into gear, with results today from Commonwealth Bank, Temple & Webster and Bapcor.
Your editors today are Lucy Battersby and Colin Kruger.
This blog is not intended as financial advice.
ASX futures up 0.3%; CBA raises dividend and buy-back
Source: Philippines Alive
